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Mortgage tips for the over 70s

Category: Mortgages
Author: Nigel Woollsey
Updated: 18/01/2019

Dragging existing debts into our later years is, rather depressingly, becoming commonplace nowadays, affecting income, outgoings and any well-intended plans for a stress-free retirement.

In today's world, where a growing number of people face the prospect of working well into their retirement years, it is hardly surprising that more people aged 70 and over are looking to secure mortgage deals.

At a glance:
  • Don't be discouraged: There are lenders who are happy to consider mortgage applications from people over 65. Challenger banks and building societies are a good place to start.
  • Lenders are just as aware as anyone that more people are working past their normal retirement age.
  • The term of the mortgage will be decided by the lender but expect this to be substantially shorter than the standard 25 years.
  • If you are remortgaging, consider whether equity release or a loan secured against your property may be better options.
  • Younger friends or relations acting as guarantors will increase the lender's confidence that the mortgage will be repaid if you are unable to do this for any reason.
What to consider before applying

As an older borrower, your three primary considerations should be:
  • The value of the property
  • The amount that you wish to borrow
  • The amount you can afford to repay each month with your retirement income
As mentioned before, any income from investments will help to bolster your monthly funding.

Types of mortgage?

There are three mortgage types to choose from: a standard mortgage an equity release scheme or a Retirement Interest Only mortgage, which is a hybrid of the two previous choices.

Discuss your retirement and mortgage options with a specialist adviser who will help you reach a decision on the type of mortgage for you based on your individual circumstances.

Check out the age limits

The minimum and maximum ages for which a mortgage provider will accept mortgage applications will be shown in their lending criteria. These ages apply to either the age at the time of application or the maximum age a borrower must be at the end of the mortgage term.

While age restrictions apply, the final decision to lend will always be at the lender's discretion.

In addition, due to the increased risk of lending to an older borrower, the term of the mortgage will often be decided by the lender.

Funding a mortgage in retirement

Even though you may have funds to meet the monthly repayments lenders will want to be sure that the mortgage is affordable upon application and in the future. Most lenders will want the mortgage to be funded by regular income.

Lenders will take into consideration all sources of income, such as pensions and other investments, to ascertain whether the loan is secure. Remember that, essentially, the mortgage lender needs confirmation that the loan can be repaid each month.

Having a younger relative or friend acting as a guarantor is another alternative when funding a mortgage in retirement. If you are unable to make repayments, for whatever reason, the guarantor will need to make the repayments instead.

As with any mortgage application, any marks on your credit history will affect the underwriter's final decision.

Top Tip
"Speak to an independent financial adviser or mortgage broker about your options – depending on your circumstances, equity release or a secured loan might be a better option for you"

What next?

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If you'd like further help and information about selecting a mortgage product, we can help. We can arrange for a team of friendly and hugely experienced mortgage advisers to discuss your needs and help with your decision. To talk to one, simply 'request a callback' and someone will be in touch shortly.

Disclaimer: This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.

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